Farm equipment dealers in India have been permitted to re-open their businesses through a new set of lockdown rules issues by the Indian government that will come into effect on April 20, according to a report from BBC. Prior to this announcement, dealers in the country had not been permitted to operate their businesses outside of parts and service, according to a report from Business Standard.
It was a long road for dealers to get to this point. India went into a full lockdown on March 24, as reported in a press release from Prime Minister Shri Narendra Modi. The lockdown banned citizens from leaving their homes, and, aside from exceptions for essential businesses, all commercial and private businesses were closed. Manufacturing of “units of essential commodities” was exempted in the March 24 guidelines.
Despite manufacturers being allowed to remain open, farm equipment dealers were not on the list of exceptions, effectively halting the Indian farm equipment supply chain, according to a report from The Tribune India. It was reported that in the Karnal district (one of India’s 22 districts), an estimated $32.7 million worth of farm equipment had been stuck in place as a result of the lockdown, with most of it being implements for harvesting. Despite the fact that the movement of harvesting and planting equipment has been exempted from the lockdown, manufacturers argued that the task was still difficult with the remaining restrictions on local workers and vehicles.
The labor shortage and trouble with banks also remain as hurdles to the ag equipment industry in India, according to a report from Business Standard. A severe shortage of truck drivers has raised freight costs on main truck routes by about 80%. Banks have also stopped lending for tractors according to the report, which is particularly problematic in India, where around 95% of tractors are purchased on credit. Shenu Agarwal, chief executive at Escorts Agri Machinery, said farmers are unlikely to seek loans even at banks that are open, citing a memo from the Reserve Bank of India that makes it mandatory for borrowers to provide a physical signature and partake in a field inspection when applying for a loan.
Tractor sales in India have been hit hard by the pandemic. According to a report from Business Standard, Mahindra’s domestic tractor sales were at 13,418 units in March, down 37.5% from 18,446 tractors sold in March of last year. Total tractor sales (exports and imports) for March were down 30.9% at 13,613 units last month compared to 19,688 in the previous year.